GIANT EAGLE, OTHERS ACQUIRE PHAR-MOR ASSETS

STEPHANIE LOUGHRAN

PITTSBURGH -- Giant Eagle here, CVS, Woonsocket, R.I., and several other retailers recently purchase the assets of the Phar-Mor discount drug store chain in a $141 million sale, according to published reports.

Effectively ending the story of the biggest player in the once flourishing deep discount drug business, Phar-Mor, Youngstown, Ohio, will close its remaining 73 stores as a part of the sale.

The pharmacy files in approximately 71 Phar-Mor locations have been liquidated, according to David Peress, managing director and general counsel, Ozer Group, Needham, Mass., an asset disposition firm handling the liquidation sales alongside Hilco Merchant Resources, Northbrook, Ill. Stores are currently conducting "going out of business" sales, Peress said.

Phar-Mor executives were not available for comment. Phar-Mor filed for Chapter 11 bankruptcy protection last September. The retailer once had over 300 stores in 33 states. Giant Eagle entered the bidding process in an effort to expand its growing pharmacy business, said Rob Borella, spokesman for the retailer.

"The pharmacy business has grown significantly for us, and this was an opportunity to help it grow further and to preserve jobs that are going to go away at Phar-Mor," he said.

Giant Eagle committed to acquiring the bankrupt discount chain's customer prescription lists and pharmaceutical store inventory from 27 Phar-Mor stores, according to a written statement by the supermarket chain. Giant Eagle plans to service the prescription files at its approximately 40 in-store pharmacies here and in the Youngstown, Ohio area.

"Diabetics, seniors and others with routine drug necessities will experience no disruption in their medication distribution as the prescription files will be directly transferred to neighborhood Giant Eagle pharmacies," said Randy Heiser, vice president of pharmacy for the supermarket chain in a statement.

Giant Eagle retail recruiters are offering preferential hiring to former Phar-Mor pharmacy and pharmacy technician employees for approximately 400 full and part-time positions currently open at the retailer's stores. "It will help shore up our pharmacy employee ranks," Borella said.

In addition, Giant Eagle plans to acquire Phar-Mor's warehouse inventory, which includes health and beauty care items, Borella told SN. Giant Eagle also purchased real estate of two Phar-Mor locations in Pittsburgh, according to Peress.

There are about 61 Phar-Mor store leases still available and they will be auctioned off by early September, Peress noted.

CVS committed to a substantial number of customer prescription records from 26 Phar-Mor stores in North Carolina, Pennsylvania, Ohio, Virginia, Indiana and one location in Illinois, said Mike DeAngelis, spokesman for the drug chain. Nearby CVS stores received the file transfers to accommodate Phar-Mor customers.

Other retailers, including Wegmans Food Markets, Rochester, N.Y.; A & P, Montvale, N.J.; Target, Minneapolis; Kroger Co., Cincinnati; Eckerd, Largo, Fla.; and Penn Traffic, Syracuse, N.Y., acquired Phar-Mor's prescription files from 17 additional stores last week, according to published reports.

Stewart Cohen, partner, Ozer Group, declined comment on the additional prescription file purchases.

This was Phar-Mor's second filing of Chapter 11. The first was in 1992 when a $1.1 billion embezzlement scheme was uncovered, according to media reports.